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Is US Apparel Manufacturing Poised for a Turnaround?

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

Will 2017 be a watershed year for U.S. apparel manufacturing?

Domestic apparel shipments increased by 8 percent in February on a 12-month smoothed basis, to an adjusted $1.1 billion, according to the most current Census Bureau data. In the first two months of 2017, shipments were 10 percent higher than the same period a year ago.

It’s a bit early to call this the beginning of a trend, however. Over the past two years, monthly growth has come in fits and starts, with many periods of decline. Despite numerous reshoring initiatives designed to grow domestic apparel production and employment, annual apparel manufacturer shipments have hovered around $12 billion each year from 2011 to 2016, after plunging steadily in the years following China’s admission to the WTO.

Although textile production shipments have been on a more pronounced upward trend over the last four months, most of the growth is reportedly in commercial segments like automotive, contract upholstery, industrial and medical textiles.

Neither sector appears to be in expansion mode, however. For apparel, both the production and capacity indices fell in the month, with capacity utilization shrinking from 67.2% to 66.7%. And apparel production employment, though flat in the past month, has dropped by 7,000 in the past year, to 127,000 workers. Apparel production employment has dropped by 82 percent in the past 20 years.

Although the textile production index contracted slightly in the past year, and employment has shrunk by 1,000 workers in the past month and 8,000 in the past year, the textile capacity and capacity utilization indices have edged up.

President Trump arguably won the election by promising to restore U.S. manufacturing to its former glory, even going so far as to issue an executive order last week underscoring that commitment. The big question remains whether this will impact textiles and apparel in a significant way.

Many experts feel that, politics aside, reshoring and near-shoring are inevitable given the need for brands and retailers to respond more quickly to changes in market trends and consumer demands. Foreign direct investment in the U.S. textile industry has picked up considerably since the election and subsequent downfall of TPP, signaling bullishness on the domestic industry.

On the other hand, some major U.S. apparel companies are finding topline growth elusive amid an extremely competitive and overstored retail environment. So far this year, there have been 1,800 retail store closures announced in the department and specialty apparel chain segments, and no doubt hundreds, if not thousands, of independent mom and pops who have decided to throw in the towel.

In the last few weeks, Hanesbrands announced major layoffs, VF Corp suffered a rare revenue decline in the most recent quarter, and Under Armour suffered its first-ever operating loss.

Until there is a more stable upward trajectory in apparel shipments and production capacity, however, it’s still premature to declare that a turnaround is underway.

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